NW Natural Builds New Facility with Tyson Foods
Posted on September 12, 2023 by Charlotte Shuff and Will Gehrke
Tags, Energy
As Oregon utilities move to meet climate regulations, gas utilities are beginning to turn toward renewable natural gas. NW Natural, the state’s largest gas utility, plans to rely heavily on non-fossil methane.
The Climate Protection Plan requires the utility to reduce emissions by 90% by 2050. NW Natural must figure out how they are going to meet these requirements or be subject to penalties. The gas utility is heavily favoring renewable natural gas as a way to reduce emissions, meet regulations, and grow corporate earnings.
CUB is committed to advocating for the best interests of customers. In this case, we reached an agreement that will allow NW Natural to move forward with the project without a major impact on customers’ bills. We also won added protections that will keep shareholders accountable if the project goes over budget.
Editor’s Note: This blog refers to “renewable natural gas,” a term used by utilities for methane gas that comes from sources other than fossil fuels. The term “renewable” is frequently criticized by environmental groups. Although renewable natural gas is not from fossil fuels, it is still methane, which is a powerful greenhouse gas.
NW Natural Builds New Facility with Tyson
NW Natural has built a new renewable natural gas facility associated with a Tyson Foods beef packaging plant located in Dakota City, Nebraska. NW Natural’s Dakota City project produces renewable natural gas by processing wastewater associated with the beef packaging plant into renewable natural gas.
This is the second renewable natural gas project that NW Natural has built. When included in bills, the Dakota City Project will increase residential rates by less than 1%.
Gas in Nebraska, Credits in Oregon
The renewable natural gas produced by NW Natural’s Dakota city facility is not being used to physically serve Oregon customers with renewable natural gas. Instead, the facility’s renewable natural gas production is sold locally in the Midwest as natural gas, while the environmental attributes (Renewable Thermal Credits) associated with Dakota City are kept by Oregon customers. The credits are being used by NW Natural to comply with Oregon’s Climate Projection Program.
Approximately 2% of NW Natural Oregon load is currenlty being met by renewable natural gas – though only on paper. As of 2023, all of NW Natural’s Renewable natural gas projects are located outside of Oregon. Although these projects count toward meeting Oregon climate regulations, Oregon customers do not have any renewable natural gas coming directly into their homes.
Shareholders Are Also on the Hook for the Performance of Dakota City
While reviewing the Dakota City renewable natural gas, CUB advocated for strong protections for customers. Under CUB’s proposal, If the cost of Dakota City is greater than projected, NW Natural’s shareholders would share in the incremental annual cost. CUB won an agreement that holds shareholders accountable over the life of the project, while letting NW Natural include the project in customers’ bills. CUB found that the Dakota City project was a least, cost least risk project for Oregon customers.
CUB Is Critical of Expanding Renewable Natural Gas Projects
When a utility builds new infrastructure, like a gas facility, it is allowed to make a profit off the investment. Normally, NW Natural serves as a purchaser of methane, and does not profit from the production of natural gas. Instead, the cost is passed onto customers.
Gas utilities are allowed to invest in renewable natural gas under Oregon Law. In 2019, the Oregon Legislature passed Senate Bill 98, which sets voluntary targets for renewable natural gas for utilities.This bill along with the climate protection program is spurring NW Natural into building expensive renewable natural gas projects.
CUB will continue to investigate utility projects to ensure they are good for customers and the environment. We expect more of these types of projects to pop up as we move forward with climate regulation deadlines.
09/12/23 | 0 Comments | NW Natural Builds New Facility with Tyson Foods